The Impact of Mexico's Economic Crisis on the Demographic Composition of the Maquiladora Labor Force

Jeffery T. Brannon, G. William Lucker

Abstract

This study focuses on the changes that have occurred since 1982 in the demographic composition of the maquiladora labor force. In the period 1983-1987, the number of obreros employed by the industry has more than doubled, increasing to 262,000 (Table 1). The most important influence on labor demand during this period was the sharp decline in the maquiladora firms' dollar-denominated wage bills. This decline was brought about by the progressive depreciation of the peso in combination with a conservative government wage policy. Labor supply behavior since 1982 has been more problematic; government-determined increases in the benchmark minimum wage have lagged well behind the inflation rate. As a result, the real purchasing power of peso wages is estimated to have fallen 40 percent since 1982. Despite the reduction in real wages, the supply of labor to the maquiladora industry has expanded to accommodate the near-explosive growth of labor demand.

In this article we argue and present evidence that maquiladoras, constrained to honor the minimum wage as both a wage floor and wage ceiling, have influenced the elasticity of the labor supply curves they face by broadening hiring criteria and by seeking locations in the interior of Mexico where there are higher levels of unemployment and lower labor force participation rates (LFPR). Further, we advance the proposition that falling real family incomes have influenced border labor supply by stimulating the flow of job seekers to the border area where jobs are plentiful and by encouraging higher LFPRs. Finally, the results of the two post-1982 surveys of maquiladora workers in Cd. Juárez are presented. The surveys provide microlevel insights into how rapid industrial expansion in an environment of general recession has influenced industry employment policies and the characteristics of the maquiladora workforce.